Major Multi-City Takedown Signals Prosecutors’ Continued Focus on Health Care Fraud and Compliance in the U.S.

July 19, 2010

In a sign of the Obama administration’s continued emphasis on anti-fraud enforcement in the health care field, the joint Department of Justice-Health and Human Services Medicare Fraud Strike Force charged ninety-four people on Friday for their alleged participation in schemes to collectively submit more than $251 million in false claims to the Medicare program.  The takedown, which included arrests in Brooklyn, Miami, Baton Rouge, Detroit, and Houston, was the largest operation by the task force since its inception in 2007.

The arrests were announced by officials at the highest level of the Department of Justice (DOJ) and the Department of Health and Human Services (HHS), including Attorney General Eric Holder, HHS Secretary Kathleen Sebelius, Assistant Attorney General Lanny A. Breuer, and various United States Attorneys, signaling that health care enforcement remains a top priority for federal prosecutors.

Trend of Increased Enforcement Includes Corporate Wrongdoers

Last year, the DOJ and HHS created an interagency group–the Health Care Fraud Prevention and Enforcement Action Team (known as HEAT)–specifically tasked with combating health care fraud.  Health care fraud is now a top-five priority at the DOJ, as well as a key area of focus for the Federal Bureau of Investigation (FBI).  In his statement to the Senate Judiciary Committee, Assistant Attorney General Tony West, citing to the billions of dollars that are "wasted on fraud and abuse," reiterated that "the Department of Justice, through its Civil, Criminal, and Civil Rights divisions, along with U.S. Attorneys’ Offices and the FBI–the entities responsible for enforcing laws against all forms of health care fraud–has prioritized much of our enforcement efforts on protecting the integrity of health care that is provided to patients."

President Obama’s 2010 budget invests $311 million–a 50 percent increase from 2009 funding–to strengthen program integrity activities within the Medicare and Medicaid programs.  These funds are not limited to investigating "street-level" fraud by individuals.  In Senate testimony, Assistant Attorney General Breuer stated that the DOJ is committed to prosecuting all who commit health care fraud, including "corporate wrongdoers."  And beginning last November, the DOJ has added several high-profile names to lead its Fraud Section, including a new chief of the Fraud Section, and continues to add "in-the-trenches" attorneys with a special focus on health care fraud to bolster the Section as well.  In fact, Obama administration officials have described fighting health care fraud as a priority of the DOJ, and health care fraud investigations as "among the highest priority investigations within the FBI’s White Collar Crime Program."

Friday’s operation was aimed at physicians, medical assistants, and health care company owners and executives running Medicare fraud schemes.  But it also serves as a strong indication that the joint DOJ-HHS Medicare Fraud Strike Force and HEAT are fully active and engaged in pursuing their missions, including health care compliance enforcement.

With this in mind, health care enforcement activity will likely continue to increase in the future.  As we have advised in prior client alerts, investigations by HHS, DOJ, and state attorneys general will likely continue in the "tried-and-true" areas, such as relationships with physician consultants, misbranding, false claims, and violations of the anti-kickback statute and Stark laws.  Enforcement officials have also begun adding to their list of practices under scrutiny, including, most recently, billing practices, "ghostwriting" and executive compensation at non-profit health care companies.  Furthermore, health care companies conducting business overseas are increasingly under scrutiny for possible FCPA violations.

The collection of factors including the political climate, the success of recent enforcement actions, the injection of new funds and federal enforcement officials, the additional practices now facing scrutiny, and the state prosecutors and regulators who have joined the fray, all point to an obvious conclusion:  Health care compliance will continue to be a burgeoning enforcement area.  In this climate, it is more important than ever before that companies institute and maintain rigorous health care compliance systems and practices.

Gibson, Dunn & Crutcher LLP

The White Collar Defense and Investigations Practice Group of Gibson, Dunn & Crutcher LLP successfully defends corporations, senior corporate executives, and public officials in a wide range of federal and state investigations and prosecutions, and conducts sensitive internal investigations for leading companies in almost every business sector. The Group has members in every domestic office of the Firm and draws on more than 75 attorneys with deep government experience, including numerous former federal and state prosecutors and officials, many of whom served at high levels within the Department of Justice and the Securities and Exchange Commission. 

Our attorneys bring a unique breadth of experience and talent to handle complex health care enforcement matters, as well as to conduct delicate internal investigations in the health care arena. We have used that experience and perspective for a wide range of health care compliance counseling engagements, including, as examples, reviews of company protocols and policies concerning interactions with health care providers, conceptualizing and instituting needs assessment reviews for the utilization of physician-consultants, and conducting analyses of how compliance policies are effectuated in the field. Our practice is cross-disciplinary in nature, at times relying on experts in various areas to address issues such as health care privacy and data breaches, intellectual property licensing, and fair market value rates, including members of our Health Care and Life Sciences Practice Group.

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